An illustration of the image shows Russian ruble notes of various denominations on a table in Warsaw, Poland, on January 22, 2016. REUTERS / Kacper Pempel
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- This content has occurred in Russia, where the law restricts coverage of Russian military operations in Ukraine
MOSCOW, June 29 (Reuters) – The ruble cut volatile trading gains on Wednesday as Russia’s finance minister marked possible interventions to ease upward pressure on the currency after approaching 50 against the dollar for the first time since May 2015.
The ruble has become the world’s best-performing currency this year, driven by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to protect Russia’s financial system from Western sanctions imposed later. that Moscow send troops to Ukraine on 24 February.
The strong ruble has raised concern among officials and export-focused companies, as it affects Russia’s revenue from selling commodities and other goods abroad for dollars and euros.
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Many Russian companies, mainly exporters of oil and gas, are already suffering economically, said Evgeny Suvorov, an economist at CentroCreditBank.
Finance Minister Anton Siluanov said Russia could reduce state spending and channel funds for foreign currency interventions to prevent the strengthening of the ruble that threatens budget revenues. Read more
The ruble reduced gains after the comment and was 0.4% weaker on the day at 52.00 against the green dollar at 1154 GMT after reaching 50.01.
Commodity export earnings, a sharp drop in imports and month-end tax payments in rubles by Russian export-oriented companies are other factors that explain the currency’s gains.
“The ruble (is) about to fall over the next few days … With the main tax payments of the month now in the rearview mirror, foreign exchange buyers can begin to intervene,” Sberbank CIB said in a note.
The ruble has risen almost 44% since the year on the Moscow Stock Exchange, but remains much weaker in banks. VTB (VTBR.MM), Russia’s second-largest bank, offered to sell cash dollars and euros at 63.45 and 67.85, respectively.
Deputy Prime Minister Andrei Belousov said this month that the industry would be more comfortable if it fell between 70 and 80 against the dollar.
Compared to the euro, the ruble was 0.6% stronger at 54.20, having risen beyond 53 for the first time since April 2015.
Capital controls have allowed the currency to ignore what the White House and credit agency Moody’s said Monday was Russia’s first default in more than a century on its international bonds. Read more
The Kremlin, which has strong currency from oil and gas revenues to make scheduled debt payments, has rejected the designation, calling it artificial and designed by Western sanctions.
Just before Russia began what it calls its “special military operation” in Ukraine, the ruble was trading at about 80 per dollar and 90 against the euro. He was then trading in free-float mode and, without the support of capital controls, was beaten due to fear of sanctions.
On the stock market, the dollar-denominated RTS index (.IRTS) fell 1.1% to 1,449.1 points. The ruble-based Russian MOEX index (.IMOEX) fell 1% to 2,384.5 points.
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Reuters report; edited by John Stonestreet, Angus MacSwan and Emelia Sithole-Matarise
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